Funding of Israeli Settlers by European Bank Under Scrutiny: EIB, International Law, and HRF's Allegation

The International Court of Justice (ICJ) has issued a series of rulings that have put the European Investment Bank (EIB) under scrutiny for its funding of Israeli settlements in the Occupied Palestinian Territory.

On July 19, 2024, the ICJ issued an advisory opinion stating that Israel's presence in the Occupied Palestinian Territory is illegal under international law. The EIB's continued funding of Israeli entities involved in illegal settlement expansion and systemic apartheid has been a point of contention.

In a similar vein, on December 29, 2023, the ICJ issued provisional measures in the South Africa v. Israel genocide case, requiring Israel to prevent acts of genocide in Gaza. The EIB's funding of entities in occupied territory may constitute "aid or assistance" to an illegal regime, as per the ICJ's advisory opinion.

The Hind Rajab Foundation (HRF) lodged a complaint with the EIB's Complaints Mechanism, accusing the EIB of funding Israeli entities involved in illegal settlement expansion and systemic apartheid. The HRF has made three demands: immediate suspension of all EIB funding to UN-blacklisted Israeli companies and settlement-related projects, a rigorous independent compliance audit conducted by external experts with public results, and EU leaders conditioning future cooperation on verifiable respect for international law, including potential sanctions and a reassessment of the Association Agreement.

Michael Lynk, former UN Special Rapporteur, and Anna Dupont, from Accountability Counsel, have expressed concern that European financial institutions provide the indispensable economic oxygen for settlements. They argue that funding settlement infrastructure while claiming to uphold EU values is hypocritical at best.

The complaint from the HRF emerges at a legal and ethical inflection point for the EU, as it faces a test to continue enabling an illegal system or realign policy with global legal norms. Over €114 billion has been pumped into settlement-linked firms by European financial institutions since 1967, while the EIB committed €1.177 billion to Palestinian development between 2021-24.

The decisions taken in the next days could define the EU's global moral weight and its authenticity as a defender of international law. Norway's global fund and Nordic banks have begun divestment from blacklisted Israeli companies, setting a policy precedent that the EIB could follow.

A public letter signed by over 30 EU Members of Parliament, along with Amnesty International, Oxfam, and others, urges a full ban on settlement-related trade, deeming current differentiation policies insufficient and ICJ-inconsistent. Dr. Emma Svensson, speaking anonymously through Crisis Group, suggested that this juncture could mark a turning point for the EU, as it holds both legal and moral high ground, but only if it chooses action over rhetoric.

Dyab Abou Jahjah, Chairman of the Hind Rajab Foundation, stated that either Europe enforces the ICJ ruling on Israel's presence in the Occupied Palestinian Territory or it admits that its treaties and human rights talk are worthless when it comes to Palestinian lives. Under the Aarhus Regulation, EU courts have authorized non-governmental challenges to EIB projects on environmental (and human rights) grounds, demonstrating judicial pathways for accountability.

Additional funds are channeled through Bank Leumi for "green transition" and "financial inclusion" programs, which maintain longstanding ties with settlement municipalities, raising compliance concerns. €250 million is allocated for the Green Line of Tel Aviv Light Rail, criticized for consolidating settler networks in occupied territory.

The ICJ further ruled that all States and international organizations must not render aid or assistance in maintaining the situation created by Israel's illegal presence. The EIB's actions in this matter will be closely watched and could have significant implications for its reputation and the EU's commitment to upholding international law.